WEST VIRGINIA CODE

For the purposes of this article the following definitions
shall apply:

(a) "Insurer" means and includes every person engaged as
indemnitor, surety or contractor in the business of entering into
contracts of insurance or of annuities as limited to:

Any insurer who is doing an insurer business, or has
transacted insurance in this state, and against whom claims arising
from that transaction may exist now or in the future;

This shall include, but not be limited to, any domestic
insurer as defined in section six, article one of chapter thirty-three and any foreign insurer as defined in section seven, article
one of said chapter thirty-three including any stock insurer,
mutual insurer, reciprocal insurer, farmers' mutual fire insurance
company, fraternal benefit society, hospital service corporation,
medical service corporation, dental service corporation, health
service corporation, health care corporation, health maintenance
organization, captive insurance company or risk retention group.

(b) "Exceeded its powers" means the following conditions:

(1) The insurer has refused to permit examination of its
books, papers, accounts, records or affairs by the commissioner,
his deputy, employees, or duly commissioned examiners;

(2) A domestic insurer has unlawfully removed from this state
books, papers, accounts or records necessary for an examination of
the insurer;

(3) The insurer has failed to promptly comply with the
applicable financial reporting statutes or rules and departmental requests relating thereto;

(4) The insurer has neglected or refused to observe an order
of the commissioner to make good, within the time prescribed by
law, any prohibited deficiency in its capital, capital stock or
surplus;

(5) The insurer is continuing to transact business or write
insurance after its license has been revoked or suspended by the
commissioner;

(6) The insurer, by contract or otherwise, has unlawfully or
has in violation of an order of the commissioner or has without
first having obtained written approval of the commissioner if
approval is required by law;

(A) Totally reinsured its entire outstanding business; or

(B) Merged or consolidated substantially its entire property
or business with another insurer.

(7) The insurer engaged in any transaction in which it is not
authorized to engage under the laws of this state; or

(8) The insurer refused to comply with a lawful order of the
commissioner.

(c) "Consent" means agreement to administrative supervision by
the insurer.

WVC 33 - 34 - 2
§33-34-2. Applicability.

The provisions of this article shall only apply to:

(a) All domestic insurers; and

(b) Any other insurer doing business in this state whose state
of domicile has asked the commissioner to apply the provisions of
this article as regards such insurer.

WVC 33 - 34 - 3
§33-34-3. Administrative supervision; order; review.
(a) An insurer may be subject to administrative supervision by
the commissioner if upon examination or at any other time it
appears in the commissioner's discretion that:

(1) The insurer's condition renders the continuance of its
business hazardous to the public, to its insureds or to its
creditors;

(2) The insurer has or appears to have exceeded its powers
granted under its certificate of authority and applicable law;

(3) The insurer has failed to comply with the applicable
provisions of this chapter or chapter twenty-three of this code;

(4) The business of the insurer is being conducted
fraudulently; or

(5) The insurer gives its consent.

(b) If the commissioner determines that one or more of the
conditions set forth in subsection (a) of this section exist, the
commissioner shall enter an order placing the insurer under
administrative supervision of the commissioner. The order shall:

(1) Notify the insurer of the commissioner's determination and
set forth the conduct, conditions and grounds upon which the
commissioner based the determination;

(2) Set forth all requirements necessary to abate the
determination; and

(3) Notify the insurer that it is under the supervision of the
commissioner and that the commissioner is applying and effectuating the provisions of the article.

(c) (1) If placed under administrative supervision, the
insurer shall have sixty days, or another period of time as
designated by the commissioner, to comply with the requirements of
the commissioner subject to the provisions of this article.

(2) If it is determined after notice and hearing that
conditions giving rise to the supervision still exist at the end of
the supervision period specified above, the commissioner may enter
an order to extend such period.

(3) If it is determined by the commissioner that conditions
giving rise to the supervision have been corrected, the
commissioner shall enter an order to release the insurer from
supervision.

(d) (1) An insurer subject to an order placing the insurer
under administrative supervision may contest and seek review of the
order, or any extensions or modifications thereof, pursuant to the
provisions of section thirteen, article two of this chapter. Every
notice of hearing shall state the time and place of the hearing and
the conduct, condition or ground upon which the commissioner based
the order. Unless mutually agreed between the commissioner and the
insurer, the hearing shall occur not less than ten days nor more
than thirty days after notice is served.

(2) A hearing upon an order of the commissioner in which the
commissioner is alleging, pursuant to subdivision (1), subsection
(a) of this section that the insurer's condition renders the continuance of its business hazardous to the public, its insureds
or its creditors shall be held privately unless the insurer
requests a public hearing, in which case the hearing shall be
public.

(3) During the period of supervision, the insurer may contest
an action taken or proposed to be taken by the supervisor
specifying the manner wherein the action being complained of would
not result in improving the condition of the insurer.

WVC 33 - 34 - 3 A
§33-34-3a. Standards to determine hazardous condition;
commissioner's authority.
(a) Standards. -- In making a determination pursuant to
subdivision (1), subsection (a), section three of this chapter as
to whether the continued operation of an insurer transacting an
insurance business in this state might be deemed to be hazardous to
the public, to its insureds or to its creditors, the commissioner
may consider the following standards either singly or in
combination:

(2) The National Association of Insurance Commissioners'
insurance regulatory information system and its other financial
analysis solvency tools and reports;

(3) Whether the insurer has made adequate provision, according
to presently accepted actuarial standards of practice, for the
anticipated cash flows required by the contractual obligations and
related expenses of the insurer, when considered in light of the
assets held by the insurer with respect to such reserves and
related actuarial items including, but not limited to, the
investment earnings on such assets and the considerations
anticipated to be received and retained under such policies and
contracts;

(4) The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient
protection for the insurer's remaining surplus, after taking into
account the insurer's cash flow and the classes of business written
as well as the financial condition of the assuming reinsurer;

(5) Whether the insurer's operating loss in the last
twelve-month period or any shorter period of time, including but
not limited to net capital gain or loss, change in nonadmitted
assets and cash dividends paid to shareholders, is greater than
fifty percent of such insurer's remaining surplus as regards
policyholders in excess of the minimum required;

(6) Whether the insurer's operating loss in the last
twelve-month period or any shorter period of time, excluding net
capital gains, is greater than twenty percent of the insurer's
remaining surplus as regards policyholders in excess of the minimum
required;

(7) Whether a reinsurer, obligor or any entity within the
insurer's insurance holding company system is insolvent, threatened
with insolvency or delinquent in payment of its monetary or other
obligations and which in the opinion of the commissioner may affect
the solvency of the insurer;

(8) Contingent liabilities, pledges or guaranties which either
individually or collectively involve a total amount which in the
opinion of the commissioner may affect the solvency of the insurer;

(9) Whether any controlling person of an insurer is delinquent
in the transmitting to, or payment of, net premiums to such insurer;

(10) The age and collectability of receivables;

(11) Whether the management of an insurer, including officers,
directors or any other person who directly or indirectly controls
the operation of such insurer, fails to possess and demonstrate the
competence, fitness and reputation deemed necessary to serve the
insurer in such position;

(12) Whether management of an insurer has failed to respond to
inquiries relative to the condition of the insurer or has furnished
false and misleading information concerning an inquiry;

(13) Whether the insurer has failed to meet financial and
holding company filing requirements in the absence of a reason
satisfactory to the commissioner;

(14) Whether management of an insurer has filed any false or
misleading sworn financial statement, released a false or
misleading financial statement to lending institutions or to the
general public, or made a false or misleading entry or omitted an
entry of material amount in the books of the insurer;

(15) Whether the insurer has grown so rapidly and to such an
extent that it lacks adequate financial and administrative capacity
to meet its obligations in a timely manner;

(16) Whether the insurer has experienced or will experience in
the foreseeable future cash flow or liquidity problems;

(17) Whether management has established reserves that do not
comply with minimum standards established by this chapter or the rules promulgated thereunder, statutory accounting standards, sound
actuarial principles and standards of practice;

(19) Whether transactions among affiliates, subsidiaries or
controlling persons for which the insurer receives assets or
capital gains, or both, do not provide sufficient value, liquidity
or diversity to assure the insurer's ability to meet its
outstanding obligations as they mature; and

(20) Any other finding determined by the commissioner to be
hazardous to the insurer's insureds, creditors or the general
public.

(b) Commissioner's authority. -- For the purposes of making a
determination of an insurer's financial condition under this
section, the commissioner may:

(1) Disregard any credit or amount receivable resulting from
transactions with a reinsurer that is insolvent, impaired or
otherwise subject to a delinquency proceeding;

(2) Make appropriate adjustments, including disallowance, to
asset values attributable to investments in or transactions with
parents, subsidiaries or affiliates consistent with the NAIC
Accounting Policies And Procedures Manual, state laws and rules;

(3) Refuse to recognize the stated value of accounts
receivable if the ability to collect receivables is highly
speculative in view of the age of the account or the financial condition of the debtor; or

(4) Increase the insurer's liability in an amount equal to any
contingent liability, pledge or guarantee not otherwise included if
there is a substantial risk that the insurer will be called upon to
meet the obligation undertaken within the next twelve-month period.

(c) Order. -- If the commissioner determines that the
continued operation of the insurer may be hazardous to its
insureds, creditors or the general public, then the commissioner
may order the insurer to do one or more of the following:
Provided, That if the insurer is a foreign insurer, the
commissioner's order may be limited to the extent provided by
statute:

(1) Reduce the total amount of present and potential liability
for policy benefits by reinsurance;

(2) Reduce, suspend or limit the volume of business being
accepted or renewed;

(3) Reduce general insurance and commission expenses by
specified methods;

(4) Increase the insurer's capital and surplus;

(5) Suspend or limit the declaration and payment of dividend
by an insurer to its stockholders or to its policyholders;

(6) File reports in a form acceptable to the commissioner
concerning the market value of an insurer's assets;

(7) Limit or withdraw from certain investments or discontinue
certain investment practices to the extent the commissioner deems necessary;

(8) Document the adequacy of premium rates in relation to the
risks insured;

(9) File, in addition to regular annual statements, interim
financial reports on the form adopted by the National Association
of Insurance Commissioners or in such format as promulgated by the
commissioner;

(11) Provide a business plan to the commissioner in order to
continue to transact business in the state; or

(12) Notwithstanding any other provision of law limiting the
frequency or amount of premium rate adjustments, adjust rates for
any nonlife insurance product written by the insurer that the
commissioner considers necessary to improve the financial condition
of the insurer.

WVC 33 - 34 - 4
§33-34-4. Confidentiality of certain proceedings and records.
(a) Notwithstanding any other provision of law and except as
set forth in this section, proceedings, hearings, notices,
correspondence, reports, records and other information in the
possession of the commissioner relating to the supervision of any
insurer shall not be subject to disclosure as provided in article
one, chapter twenty-nine-b of this code, shall not be subject to
subpoena and shall not be subject to discovery or admissible in
evidence in any private civil action, except as provided by this
section. However, the commissioner is authorized to use the
documents, materials or other information in the furtherance of any
regulatory or legal action brought as part of the commissioner's
official duties.

(b) The personnel of the offices of the Insurance Commissioner
shall have access to these proceedings, hearings, notices,
correspondence, reports, records or information as permitted by the
commissioner. Neither the commissioner nor any person who received
documents, materials or other information while acting under the
authority of the commissioner shall be permitted or required to
testify in any private civil action concerning any such documents,
materials or information.

(c) The commissioner may share the notices, correspondence,
reports, records or information with other state, federal and
international regulatory agencies, with the National Association of
Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities,
if the commissioner determines that the disclosure is necessary or
proper for the enforcement of the laws of this or another state of
the United States, and provided that the recipient agrees to
maintain the confidentiality of the documents, material or other
information. No waiver of any applicable privilege or claim of
confidentiality shall occur as a result of the sharing of
documents, materials or other information pursuant to this
subsection.

(d) The commissioner may open the proceedings or hearings or
make public the notices, correspondence, reports, records or other
information if the commissioner deems that it is in the best
interest of the public, the insurer, its insureds, creditors or the
general public.

(e) This section does not apply to hearings, notices,
correspondence, reports, records or other information obtained upon
the appointment of a receiver for the insurer by a court of
competent jurisdiction.

(13) Increase salaries and benefits of officers or directors
or the preferential payment of bonuses, dividends, or other
payments deemed preferential.

WVC 33 - 34 - 6
§33-34-6. Administrative election of proceedings.

Nothing contained in this article shall preclude the
commissioner from initiating judicial proceedings to place an
insurer in rehabilitation or liquidation proceedings or other
delinquency proceedings, however designated under the laws of this
state, regardless of whether the commissioner has previously
initiated administrative supervision proceedings under this article
against the insurer.

WVC 33 - 34 - 7
§33-34-7. Rules.

The division is empowered to adopt reasonable rules pursuant
to chapter twenty-nine-a of this code deemed necessary for the
implementation of this article.

WVC 33 - 34 - 8
§33-34-8. Meetings between the commissioner and the special deputy
supervisor.

Notwithstanding any other provision of this code to the
contrary, the commissioner may meet with a special deputy
supervisor appointed under this article and with the attorney or
other representative of the special deputy supervisor, without the
presence of any other person, at the time of any proceeding or
during the pendency of any proceeding held under authority of this
article to carry out the commissioner's responsibilities as
provided in this article or for the special deputy supervisor to
carry out his or her duties as provided in this article.

(1) During the period of supervision the division by contract
or otherwise may appoint a special deputy supervisor to supervise
the insurer. In the event that a special deputy supervisor is not
appointed, the commissioner shall serve in such capacity.

(2) Each insurer which is subject to administrative
supervision by the department shall pay to the division the
expenses of its administrative supervision at the rates established
by the division. Expenses shall include actual travel expenses, a
reasonable living expense allowance, compensation of the special
deputy supervisor or other persons employed or appointed by the
division for purposes of the supervision, and necessary attendant
administrative cost of the division directly related to the
supervision. The travel expense and living expense allowance shall
be limited to those expenses necessarily incurred in the
performance of official duties relating to the administrative
supervision and shall be paid by the insurer together with
compensation upon presentation by the division to the insurer of a
detailed account of the charges and expenses after a detailed
statement has been filed by the special deputy supervisor or other
person employed or appointed by the division and approved by the
division.

(3) All moneys collected from insurers for the expenses of
administrative supervision shall be deposited into an account
created in the state treasury designated the "Insurance
Commissioner's Regulatory Trust Fund", and the division is
authorized to make deposits when required into this fund from moneys collected in the commissioner's "Operating-Additional Fees"
account.

(4) The division is authorized to pay to the special deputy
supervisor or person employed or appointed by the division for
purposes of the supervision out of such trust fund,as created in
subsection three of this section, the actual travel expenses,
reasonable living expense allowance, and compensation in accordance
with the statement filed with the division by the special deputy
supervisor or other person, as provided in subsection (2), upon
approval by the division.

(5) The division may in whole or in part defer payment of
expenses due from the insurer pursuant to this section upon a
showing that payment would adversely impact the financial condition
of the insurer and jeopardize its rehabilitation. The payment
shall be made by the insurer when the condition is removed and the
payment would no longer jeopardize the insurer's financial
condition.

WVC 33 - 34 - 10
§33-34-10. Immunity.

There shall be no liability on the part of, and no cause of
action of any nature shall arise against, the insurance
commissioner or the division or its employees or agents thereof for
any action taken by them in the performance of their powers and
duties under this article.

WVC 33 - 34 - 11
§33-34-11.
Repealed.

Acts, 2010 Reg. Sess., Ch. 108.

Note: WV Code updated with legislation passed through the 2016 Regular Session
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